Bank of Japan Shares May Have Become the Latest Meme Stock

(Bloomberg) -- GameStop. Nokia. The Bank of Japan?

Japan's central bank joined the ranks of equities with puzzling surges in valuation led by retail investors on Monday, as its shares surged by their daily limit. The stock rose 18%, the most since 2005, to 33,000 yen a share.

Even experienced investors are often surprised to learn that as well as being Japan's lender of last resort and a key pillar supporting the equity market, the BOJ is itself a publicly listed entity on the Tokyo Stock Exchange's Jasdaq section.

As an asset, the stock is hardly attractive -- carrying no voting rights and offering extremely limited dividends. But in an era when sneakers are an asset class and a joke cryptocurrency is worth $6 billion, the chance to buy a bank that literally prints money may be too good a proposition for retail investors to pass up.

“One shouldn't treat BOJ shares as a normal stock -- that's nonsense,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “But since the BOJ's share price is driven by retail investors, it can show what the sentiment is like among that group.”

Despite the minuscule trading volume with only 4,100 shares exchanged, Monday's spike was enough to catch the attention of day traders on Twitter and other online forums where Japan's growing horde of retail investors share their insights. Many were bewildered by the move. Others seemed surprised to learn that the country's central bank was in fact a listed stock.

From 2015: The Double Mystery of BOJ Stock Rally Boosting Japan's Megabanks

The BOJ is one of the world's few publicly traded central banks, with peers including Belgium, Greece and Switzerland. The government holds most of its shares with a 55% stake, while individual investors have 40%.

There's no real benefit to owning a share, or subscriber certificates as they're technically called. For some, it's merely a status symbol. In the bubble era of the 1980s, some individual investors used to frame their certificates of ownership as a sort of collectible, Fujito explained. At its peak in October 1989, a single BOJ share cost an eye-watering 745,000 yen, more than twenty times its current valuation.

“Short-term retail investors don't care about dividends, they're looking just for capital gains,” said Tomoichiro Kubota, a senior market analyst at Matsui Securities Co. “They'll see it as attractive so long as the share price keeps rising and there are buyers.”

With Japan's stocks recently climbing to 30-year highs, retail investor sentiment is improving, Fujito said. Individual investors accounted for 27% of the trading value in the Tokyo and Nagoya Stock Exchanges as of Feb. 19, according to data compiled by Bloomberg.

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